-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BMpH8lFNA83yCD56GKOio2DG7k4wsuRw2o6Ku/uXEDa3nmobTjoDQzVfbhq5FTrJ i7y564YLaAyLzjue3vG0sw== 0000897069-97-000443.txt : 19971114 0000897069-97-000443.hdr.sgml : 19971114 ACCESSION NUMBER: 0000897069-97-000443 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971112 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEIN WERNER CORP CENTRAL INDEX KEY: 0000046613 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 390340430 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02725 FILM NUMBER: 97713123 BUSINESS ADDRESS: STREET 1: 2120 N PEWAUKEE RD STREET 2: PO BOX 1606 CITY: WAUKESHA STATE: WI ZIP: 53188-2404 BUSINESS PHONE: 4145426611 MAIL ADDRESS: STREET 1: 2120 N PEWWAUKEE ROAD STREET 2: PO BOX 1606 CITY: WAUKESHA STATE: WI ZIP: 53188-2404 10-Q 1 SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. 20549 Form 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the Quarterly Period Ended: September 27, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____________ to __________. Commission File Number 1-2725 HEIN-WERNER CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) WISCONSIN 39-0340430 ------------------------------- ---------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 2120 Pewaukee Road, Waukesha, Wisconsin 53188-2404 --------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (414) 542-6611 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Number of shares of $1 par value common stock issued and outstanding at November 12, 1997: Issued 2,760,489 Treasury 0 ---------- Outstanding 2,760,489 ========== PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - Unaudited ($000) September 27, December 31, 1997 1996 -------------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,846 $ 0 Accounts receivable 12,437 20,445 Less allowance for losses 1,827 1,651 --------- --------- 10,610 18,794 Inventories 10,422 17,415 Prepaid expenses and other 2,130 881 -------- --------- TOTAL CURRENT ASSETS 31,008 37,090 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land 0 90 Buildings 1,191 3,125 Machinery and equipment 6,345 14,361 --------- --------- 7,536 17,576 Less accumulated depreciation 4,863 12,125 --------- --------- NET PROPERTY, PLANT AND EQUIPMENT 2,673 5,451 OTHER ASSETS: Patents and trademarks 1,164 1,359 Goodwill 141 2,282 --------- --------- 1,305 3,641 Less accumulated amortization 703 1,467 --------- --------- Net intangibles 602 2,174 Noncurrent notes receivable 939 1,159 Less allowance for uncollectible notes 470 500 --------- --------- Net notes receivable 469 659 Other 421 224 --------- --------- TOTAL OTHER ASSETS 1,492 3,057 --------- --------- $ 35,173 $ 45,598 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Balance Sheets - Unaudited ($000) September 27, December 31, 1997 1996 -------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 2,337 $ 3,281 Current installments of long-term debt 134 1,856 Accounts payable 1,964 4,873 Accrued payroll and related expenses 1,657 2,199 Accrued commissions 535 1,055 Income tax payable 497 0 Other accrued expenses 3,651 2,933 --------- --------- TOTAL CURRENT LIABILITIES 10,775 16,197 Long-term debt, excluding current installments 326 10,161 Other long-term liabilities 1,423 1,304 --------- --------- TOTAL LIABILITIES 12,524 27,662 STOCKHOLDERS' EQUITY: Common stock of $1 par value per share Authorized: 20,000,000 shares; Issued: 2,760,489 shares at September 27, 1997 and 2,629,320 at December 31, 1996 2,760 2,629 Capital in excess of par value 12,732 11,995 Retained earnings 7,830 2,921 Cumulative translation adjustments (673) 443 --------- --------- 22,649 17,988 Less cost of common shares in treasury - no shares at September 27, 1997 and 3,104 shares at December 31, 1996 0 52 --------- --------- TOTAL STOCKHOLDERS' EQUITY 22,649 17,936 --------- --------- $ 35,173 $ 45,598 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Operations ($000) (except per share data) - Unaudited
Three months ended Nine months ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, (Amounts in thousands, except 1997 1996 1997 1996 per share data) Net sales $ 7,482 $8,827 $27,121 29,412 Cost of sales 3,953 4,676 14,523 15,534 ------- ------- ------- ------- Gross profit 3,529 4,151 12,598 13,878 Selling, general and administrative expenses 3,456 3,885 11,500 12,094 ------- ------- ------- ------- Operating profit 73 266 1,098 1,784 Interest (income) expense-net (72) 121 42 412 Other (income) expense-net 19 (34) 107 (92) ------- ------- ------- ------- Income from continuing operations, before income tax 126 179 949 1,464 Income tax expense (benefit) 251 (27) 384 92 ------- ------- ------- ------- Net income (loss) from continuing operations (125) 206 565 1,372 Discontinued businesses: Income (loss) from operations of discontinued businesses, net of related income tax 0 (4) (235) 92 Gain (loss) on the disposal of discontinued businesses, net of related income tax (374) 0 5,470 0 ------- ------- ------- ------- Net income (loss) $ (499) $ 202 $ 5,800 $ 1,464 ======= ======= ======= ======= Earnings (loss) per share from continuing operations-primary $ (0.04) $ 0.07 $ 0.20 $ 0.49 Earnings (loss) per share from discontinued operations- primary (0.13) 0 1.81 0.03 ------- ------- ------- ------- Earnings (loss) per share- primary $ (0.17) $ 0.07 $ 2.01 $ 0.52 ======= ======= ====== ======= Earnings (loss) per share from continuing operations-fully diluted $ (0.04) $ 0.07 $ 0.19 $ 0.48 Earnings (loss) per share from discontinued operations-fully diluted (0.13) 0.00 1.80 0.03 ------- ------- ------- -------- Earnings (loss) per share-fully diluted $ (0.17) $ 0.07 $ 1.99 $ 0.51 ======= ======= ======= ========
See accompanying notes to interim consolidated financial statements. Consolidated Statements of Cash Flows - Unaudited ($000) Nine months ended Sept. 27, Sept. 28, 1997 1996 CASH FROM OPERATING ACTIVITIES: Net income $ 5,800 $ 1,464 Adjustments to net income for expenses (gains) not affecting cash: Depreciation and amortization 832 912 Bad debt expense 50 292 Gain on disposal of property, plant and equipment 0 (22) Gain on sale of discontinued businesses (7,391) 0 Increase (decrease) in cash, net of the effects of discontinued businesses, due to changes in: Accounts receivable 5,277 6,578 Inventories 612 (251) Prepaid expenses and other assets (1,169) 263 Accounts payable (2,909) (6,112) Income tax payable 497 0 Accrued expenses and other liabilities (3,263) (395) ------- ------- Cash provided by (used in) operating activities . . . . . . . . . . . . . (1,664) 2,729 CASH USED IN INVESTING ACTIVITIES: Capital expenditures (734) (634) Patents and trademarks 0 (720) ------- ------- Cash used in investing activities . . (734) (1,354) CASH FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable (944) (647) Proceeds from long-term debt 0 720 Repayments of long-term debt (11,557) (1,410) Proceeds from sale of discontinued businesses 23,861 0 -------- -------- Cash provided by (used in) financing activities . . . . . . . . . . . . . . 11,360 (1,337) Cumulative translation adjustments . . . (1,116) (434) -------- -------- TOTAL CASH PROVIDED (USED) 7,846 (396) CASH - BEGINNING OF THE PERIOD 0 396 ------- -------- CASH - END OF THE PERIOD $7,846 $ 0 ======= ======== See accompanying notes to interim consolidated financial statements. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS ACCOUNTING POLICIES: The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. All adjustments are normal and recurring. All items stated herein are subject to year-end audit. INVENTORY: ================================================================= (Amounts in thousands) 9/27/97 12/31/96 ----------------------------------------------------------------- Raw Material $ 1,945 $ 5,574 Work-in-Process 217 1,172 Finished Goods 8,260 10,669 ----------------------------------------------------------------- $ 10,422 $ 17,415 ================================================================= MATERIAL CONTINGENCIES: A) Financial Instruments with Off-Balance-Sheet Risk. To meet the financing needs of consumers of its collision repair and engine rebuilding products, the Company is, in the normal course of business, a party to financial instruments with off-balance-sheet risk. The instruments are guarantees of notes payable to financing institutions arranged by the Company. The Company performs credit reviews on all such guarantees. These guarantees extend for periods of up to six years and expire in decreasing amounts through 2001. The amount guaranteed to each institution is contractually limited to a portion of the amount financed in a given year. The notes are collateralized by the equipment financed. Proceeds from the resale of recovered equipment have generally been 80% to 90% of repurchased notes. The maximum credit risk to the Company at September 27, 1997 was approximately $1,900,000. B) Litigation The Company is involved in legal proceedings, claims and administrative actions arising in the normal course of business. In the opinion of management, the Company's liability, if any, under any pending litigation or administrative proceeding would not materially affect its financial condition or operations. C) Environmental Claims From time to time the Company is identified as a potentially responsible party in environmental matters, primarily related to waste disposal sites, which contain residuals from the manufacturing process that were previously disposed of by the Company in accordance with applicable regulations in effect at the time of disposal. Materials generated by the Company at these sites have been small and claims against the Company have been handled on a de minimis basis. In addition, the Company has indemnified purchasers of property previously sold by the Company against any environmental damage which may have existed at the time of the sale. In the opinion of management, the Company's liability, if any, under any pending administrative proceeding, claim, or investigation, would not materially affect its financial condition or operations. DISCONTINUED OPERATIONS: Pursuant to an agreement entered into on April 9, 1997, on May 29, 1997, the Company sold for cash substantially all of the business and assets, and transferred certain of the liabilities, of its Great Bend Industries Division to Kaydon Acquisition VIII, Inc., a wholly-owned subsidiary of Kaydon Corporation. Pursuant to an agreement entered into on August 18, 1997, on August 28, 1997, the Company sold for cash substantially all of the business, including certain assets and liabilities, of its Winona Van Norman Division to Van Norman Equipment Co., Inc. Selected unaudited financial information of these divisions is as follows:
Three Months Ended Nine Months Ended 9/27/97 9/28/96 9/27/97 9/28/96 Net sales $ 1,397 $ 6,171 $ 13,004 $ 21,079 Income tax (benefit) applicable to income (loss) from operations 0 0 4 0 Income (loss) from measurement date to 9/27/97 (344) (244) Income tax applicable to gain on the disposal (80) 1,972 Proceeds from disposal $ 1,244 $ 23,861
ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales from continuing operations for the third quarter of 1997 were $7.5 million, versus $8.8 million for the third quarter of 1996. Net sales originating in North America were $3.7 million for the third quarter of 1997, compared with $3.6 million for the prior year quarter. Net sales of the European operation for the third quarter of 1997 were $3.8 million, compared with $5.2 million for the 1996 quarter due primarily to the strong U.S. dollar and generally weak business conditions in Western Europe. Net sales from continuing operations for the nine months ended September 27, 1997 were $27.1 million, compared with $29.4 million for the 1996 period. North American net sales for the nine months of 1997 were $12.6 million, compared with $13.1 million for the nine months of 1996, while European net sales were $14.5 million for the nine months of 1997, compared with $16.3 million for the nine months of 1996. Once again, the decline in European net sales was due primarily to the strong U.S. dollar and generally weak business conditions in Western Europe. Gross profit margins from continuing operations in North America were 45.0% for the third quarter of 1997 compared with 49.9% for the third quarter of 1996. European margins were 49.3% for the third quarter of 1997 versus 45.0% for the 1996 quarter. Consolidated margins were 47.2% for the 1997 quarter compared with 47.0% for the 1996 quarter. For the nine months ended September 27, 1997, North American margins were 46.8%, compared with 47.5% in the prior year period while European margins were 46.2%, compared with 46.9% in the prior year period. For continuing operations, the increase in consolidated operating expenses as a percent of net sales to 46.2% for the third quarter of 1997 from 44.0% for the 1996 quarter was due to the decline in net sales, as actual operating expenses declined 11%. Similarly, operating expenses as a percent of net sales increased to 42.4% for the nine months ended September 27, 1997 from 41.1% for the 1996 period while actual operating expenses declined 5%. Interest expense allocable to continuing operations declined 90% for the nine months ended September 27, 1997 versus the comparable period in 1996, due primarily to the application of proceeds from the sale of the Great Bend Industries Division to reduce debt. Financial Condition The Company plans to use the cash generated from the divestitures of its Great Bend Industries and Winona Van Norman Divisions to expand into markets which are counter-cyclical to the automotive industry, thus providing the Company with the ability to maintain long-term stability and growth over the course of future business cycles and fluctuating economic conditions. The Company expects that its liquidity requirements will be met by cash generated from operations, although it does have credit facilities in place should the need arise. Short-term credit facilities in Europe are considered sufficient to supplement cash from operating activities to satisfy liquidity requirements there. Changes in short-term borrowing are primarily due to seasonal cash usage patterns. For the nine months ended September 27, 1997, the Company experienced a net increase in cash of $7.8 million, compared with a net decrease in cash for the 1996 nine month period of $400,000. The 1997 increase was primarily due to cash provided by financing activities which, as a result of the sale of the discontinued businesses and the subsequent repayment of debt, generated $11.4 million of cash. Financing activities for the 1996 period reflected a $1.3 million use of cash due to repayment of debt. Investing activities showed uses of cash due to capital expenditures of $0.7 million for the 1997 nine month period and of $0.6 million for the 1996 nine month period. The 1996 nine month period also showed a $0.7 million use of cash due to a major trademark purchase. Operating activities for the nine months of 1997 showed a $1.7 million use of cash while they generated $2.7 million for the 1996 period. PART II - OTHER INFORMATION ITEM 6: (a) Exhibits (11) Computation of Earnings Per Share (27) Financial Data Schedule (b) Form 8-K On September 12, 1997, the Company filed a Current Report on Form 8-K dated August 28, 1997 to reflect (under Item 2 of Form 8-K) the Company's sale of substantially all of the business, including certain assets and liabilities, of its Winona Van Norman Division to Van Norman Equipment Co., Inc. ("VNEC") pursuant to an Asset Purchase Agreement, dated as of August 18, 1997, by and among the Company, VNEC and Cornelius E. Mieras. The Current Report on Form 8-K included (under Item 7 of Form 8-K) the following financial statements and related notes thereto: Pro Forma Condensed Consolidated Balance Sheet at June 28, 1997 and Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 1996 and for the six months ended June 28, 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEIN-WERNER CORPORATION ("Registrant") /s/Mary L. Kielich -------------------------------- Corporate Controller Assistant Treasurer (Principal Financial Officer) November 12, 1997 ------------------- Date Index of Exhibits Exhibit No. Description ----------- ------------------------------------------------- (11) Computation of Earnings Per Share (27) Financial Data Schedule EX-11 2 Exhibit 11 Computation of Earnings per Share ($000 except per share data)
Three months ended Nine months ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, 1997 1996 1997 1996 PRIMARY: Weighted average common shares outstanding 2,760 2,757 2,760 2,757 Common equivalent shares 227 55 119 40 ------ ------ ------ ------ Weighted average common shares and common equivalent shares outstanding 2,987 2,812 2,879 2,797 ======= ====== ====== ====== Net income (loss) from continuing operations $ (125) $ 206 $ 565 $1,372 Earnings (loss) from discontinued operations (374) (4) 5,235 92 ------- ------- ------- ------- Net income (loss) applicable to common shares $ (499) $ 202 $5,800 $1,464 ======= ======= ======= ======= Earnings (loss) per share from continuing operations - primary $(0.04) $0.07 $ 0.20 $ 0.49 Earnings (loss) per share from discontinued operations - primary (0.13) 0.00 1.81 0.03 ------- ------- ------- ------- Earnings (loss) per share - primary $(0.17) $0.07 $ 2.01 $ 0.52 ======= ======= ======= ======= FULLY DILUTED: Weighted average common shares outstanding 2,760 2,757 2,760 2,757 Common equivalent shares 227 55 149 44 Additional shares assuming conversion of subordinated debentures 0 564 0 564 ------- ------- ------- ------- Fully diluted weighted average common shares and common equivalent shares outstanding 2,987 3,376 2,909 3,365 ======= ======= ======= ======= Net income (loss) from continuing operations $(125) $ 289 $ 565 $1,634 Earnings (loss) from discontinued operations (374) (4) 5,235 92 ------- ------- ------- ------- Net income (loss) applicable to common shares $(499) $ 285 $5,800 $1,726 ======= ======= ======= ======= Earnings (loss) per share from continuing operations - fully diluted $(0.04) $0.07 $ 0.19 $ 0.48 Earnings (loss) per share from discontinued operations - fully diluted (0.13) 0.00 1.80 0.03 ------- ------- ------- ------- Earnings (loss) per share - fully diluted $(0.17) $0.07 $ 1.99 $ 0.51 ======= ======= ======= =======
--------------------------------- Common shares have been adjusted to give effect to the 5% stock dividend paid January 24, 1997. The $3,375,000 8% Convertible Subordinated Notes at September 28, 1996 are convertible to common shares at a price of $5.98 per share after giving effect to the stock dividend paid January 24, 1997. The Notes were repaid on May 29, 1997 and options were issued concurrently to the holder of the Notes. Earnings per common share and common equivalent share were computed by dividing the net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Earnings per common share, assuming full dilution, is determined by assuming that at the beginning of the period convertible notes were converted at the price per share in effect at that time and common share options were exercised. As to the options, incremental shares would be calculated using the treasury stock method, assuming common share purchases at the greater of the average market price of the common shares for the period or the ending price of the common shares. EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HEIN-WERNER CORPORATION AND THE COMPUTATION OF EARNINGS PER SHARE (EXHIBIT 11) AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND COMPUTATION. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-27-1997 7,846 0 12,437 1,827 10,422 31,008 7,536 4,863 35,173 10,775 0 0 0 2,760 19,889 35,173 27,121 27,121 14,523 26,023 0 0 42 949 384 565 5,235 0 0 5,800 2.01 1.99
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